Financial Tips

Financial Tips

Financial Tips

True or false?
If you add a nonspouse individual to the title of your property as a joint owner, this action is immediately considered a completed gift that may result in gift tax implications.

Answer: It depends on the type of property.

Treasury Regulation § 25.2511-1(h)(4) explains that in the case of bank accounts and most brokerage accounts that require securities to be registered in a “street name,” adding a nonspouse individual as a joint owner is not a reportable gift until/unless that joint owner draws funds from the account for his or her personal use. With other types of assets, such as a business or personal residence, a gift is deemed to have occurred as soon as the joint tenancy is established.

It should be noted that naming a spouse as a joint owner is less complicated because of the unlimited marital deduction, which allows for unrestricted tax-exempt gifting between spouses.

We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.

Fiction: Any recent college graduate can defer or forebear his or her student loans.

Fact: Lenders may allow students to defer making loan payments, but they also have strict eligibility requirements for doing so. The most common reasons for deferment include unemployment, school enrollment, and military deployment. It is important to understand that the borrower may still be held responsible for paying interest on the loan while it is in deferment, and the lender will determine when the borrower needs to resume payments. Young people may also qualify for loan forbearance, which allows them to suspend or reduce payments—typically in one-year installments—for up to three years. To avoid damaging their credit or becoming delinquent, young people who are having trouble making loan payments should contact the lender to determine if they qualify for deferment or forbearance. Loans can also be deferred if the borrower returns to school. Most lenders will automatically defer loan payment if the student is enrolled at least half-time in a qualifying program, such as graduate school.

This communication strictly intended for individuals residing in the states of CA, CO, DC, DE, FL, GA, HI, IL, MD, MN, NC, NJ, NV, NY, OK, PA, SC, TX, VA, WA, WV. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services. Investments are not FDIC- or NCUA-insured, are not guaranteed by a bank/financial institution, and are subject to risks, including possible loss of the principal invested. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.